Friday, May 25, 2018
- Supported by dry conditions in Australia, Canada, southern Russia and the United States, wheat futures climbed higher this week. A stronger U.S. dollar, which makes U.S. wheat more expensive relative to competing origins, limited gains. CBOT and KCBT July wheat each added 25 cents, closing at $5.43/bu and $5.64/bu, respectively. MGEX increased 15 cents to $6.44bu. CBOT July corn gained 3 cents to $4.06/bu and CBOT July soybeans climbed 43 cents to $10.41/bu.
- In the Gulf, softening demand for export elevations offset higher firmer rail values, pressuring export basis lower ahead of the U.S. holiday weekend. Slow farmer selling offered support across the United States. In the PNW, export elevation capacity remains limited for nearby contracts due to continued demand from corn. Generally, June and July are slower months for the PNW and elevators use that time to do routine maintenance. This year, maintenance projects are being pushed into August, providing support for August PNW export basis.
- USDA’s weekly Export Sales Report included net wheat sales of 112,300 metric tons (MT) for marketing year 2017/18. Sales were above trade expectations of (100,000) to 100,000 MT. Total known outstanding sales and accumulated exports of all classes of wheat for 2017/18, through May 17, 2018, were 23.7 million metric tons (MMT), 16% behind last year’s year-to-date total. USDA expects 2017/18 U.S. wheat exports to reach 24.8 MMT.
- On May 21, USDA rated 36% of the winter wheat crop in good to excellent condition, unchanged from last week, and 35% of the winter wheat is in poor or very poor condition. A majority of hard red winter (HRW) in Kansas, Oklahoma and Texas is in poor or very poor condition. USDA reported 61% of winter wheat has headed, behind the 5-year average pace of 64%. U.S. spring wheat planting is 79% complete, similar to the 5-year average pace of 80% on the same date; 37% of spring wheat has emerged, compared to the 5-year average of 52%.
- The May 24 U.S. Drought Monitor reported beneficial rains fell across Kansas, Oklahoma and Texas; still the majority of HRW-acres in those states remain in severe to exceptional drought. Rain also fell in northeastern Montana and across North and South Dakota, improving conditions in those areas. However, the areas where drought has been an issue since last fall continue to need additional moisture. The current forecast expects above average temperatures and widespread rain across the United States.
- FranceAgriMer rated 79% of French common wheat in good to excellent condition, up from 78% the week prior.
- Sovecon, a Russian agricultural consultancy, lowered its forecast for 2018/19 Russian wheat production to 77.0 MMT, down 1.2 MMT from its previous estimate due to unfavorable weather conditions in Siberia.
- According to the Saskatchewan weekly crop report, spring grains (including wheat) planting was 75% complete as of May 21, up from 35% last week and well ahead of the 5-year average pace of 55%. Topsoil moisture was rated 47% adequate and 53% short or very short. Crops are slowly emerging, despite damage from strong winds and lack of moisture. In Alberta, 44% of spring wheat planting is complete, up from 8% the week prior. Producers are almost 7 days behind normal, and soil moisture levels vary significantly across the province.
- The Australian Bureau of Meteorology (BOM) reported the major wheat-producing states of Queensland and New South Wales have received between 30% and 60% of average rainfall over the past year, leading to long-term deficits in both groundwater and surface water. Drought-affected areas in Western Australia, which also produces significant amounts of wheat, have received just 20% to 30% of average rainfall. BOM noted last week’s rain had very little effect on deficiencies.
Baltic and U.S. Dollar Indices
- The Baltic Index decreased to 1109, down from 1273 last Friday.
- The Dollar Index rose to 94.20, up from 93.64 last week.
Source: U.S. Wheat Associates